WHAT DOES THE INSURANCE INDUSTRY HAVE TO DO WITH CLIMATE CHANGE?

Insurance companies are supposed to protect us from catastrophic risks. Yet when it comes to the largest threat to humanity – climate change – insurers are fueling dangerous global warming by financing dirty fossil fuels.

Coal insurance profit cycle.jpg

You can’t drive a car or buy a house without insurance. Likewise, without insurance, energy companies cannot build or operate destructive fossil fuel projects like the Keystone XL pipeline, coal-fired power plants, oil drilling in the Arctic, or gas export facilities and pipelines.

HOW INSURERS PROP UP FOSSIL FUELS

THEY PROVIDE INSURANCE FOR FOSSIL FUEL PROJECTS

Insurance coverage allows carbon-intensive projects such as coal plants and tar sands mines and pipelines to be built and operated.

Once built, fossil fuel infrastructure locks us into dirty and expensive energy that is causing climate change and harming public health. 

THEY INVEST BILLIONS INTO FOSSIL FUEL COMPANIES

Insurance companies invest customers’ premiums in fossil fuel companies - that is how they make money. The 40 largest U.S. insurers hold over $450 billion in coal, oil, gas and electric utility stocks and bonds. They hold a bigger proportion of their investments in fossil fuels than average index funds.

As the ultimate manager of risk, the insurance industry quietly shapes modern society, deciding what type of projects can be built and operated. Insure Our Future is holding insurers accountable for their continued support of fossil fuels.


INSURERS KNOW THE RISKS OF GLOBAL WARMING, YET THEY INSURE AND INVEST IN THE COMPANIES CAUSING IT

Insurers were among the earliest voices warning about the risk of runaway climate change, which makes their support of fossil fuels particularly hypocritical.

Insurers are in the business of risk management. They are experts at modeling catastrophe risk, pricing risk, and designing preventive measures. In fact, leading insurance companies were among the first to publicly acknowledge climate change and to call for action in the 1970s.

In recent years, the hypocrisy of U.S. insurance companies helping to finance fossil fuels has become more stark. In the aftermath of record-breaking wildfires, hurricanes, and flooding, insurance companies are increasing premiums and restricting their coverage in areas prone to climate change-induced risk. Simultaneously, they continue to provide coverage and invest billions in the companies and projects causing climate change.

It is a perverse loop that allows insurers to facilitate polluting projects that cause global warming while at the same time providing insurance against the climate impacts of these same projects.
— Bill McKibben, founder of 350.org

THE U.S. INSURANCE INDUSTRY LAGS BEHIND ITS GLOBAL PEERS

Outside of the U.S., insurance carriers have starting to take action by restricting the financing and coverage they provide to the companies and projects that are driving global warming.

Several international insurers and reinsurers have moved forward - leaving U.S. insurers behind. Since 2015, over 20 international insurers have divested from coal companies, and fifteen, including Allianz, Axa, Generali, QBE, Swiss Re, and Zurich, among others, have stopped or limited insurance coverage for coal, and some have also excluded tar sands. Several of these insurers offer their products and services in the United States.

Yet this knowledge doesn’t translate into action among the vast majority of U.S. insurers. Only one major U.S. insurance company, Chubb, has pledged to stop insuring or investing in coal companies.

Notably, the online renters and homeowners insurance company Lemonade has not only pledged to never invest in fossil fuels, but has also called on the U.S. insurance industry to follow its lead.

In the investments and underwriting that insurers lavish on fossil fuel companies, they act like climate deniers, ignoring the overwhelming scientific evidence that the emissions they finance are producing a slow-motion cataclysm.
— Jacques Leslie

U.S. INSURERS ARE UNDERMINING GLOBAL CLIMATE EFFORTS

The world must completely phase out coal to stop runaway climate change, yet there are currently over 800 new coal-fired power plants under construction or in the construction pipeline. Without insurance, most new coal projects cannot be financed and built, and most existing coal facilities would have to close.

With European insurers exiting the coal sector, U.S. insurers have an outsized role in deciding whether new coal plants around the world can be built or operated. This is especially true in Asia, where most new coal plants are proposed.

If U.S. insurers don’t take action, they will offer a lifeline to the dirty energy projects that are polluting the air and water for local communities living near coal plants and tar sands mines, and they are helping to drive climate change, the very same risk they’re getting paid to protect against.